Making sure property purchased in Spain does not end up getting knocked down is a tricky business. Alfonso Valero explains the best ways to avoid disaster.

We have lately been reading in the press about the ­demolition of ­properties owned by British people in Spain. This has ­understandably made many very cautious. So what are the circumstances and the remedies ­available to affected owners?

Spanish law does protect private property, but that protection is not unlimited and is subject to restrictions.

The first thing to bear in mind is that rights of ownership of a property can be subject to other legal claims arising from the needs of the wider community. For example, pursuant to the Expropriation Law of 16 December 1954, if any infrastructure (such as a motorway or a railway) needs to be built, an owner may be dispossessed of his land or property. According to section 28 of the Land Law 8/2007 the owners will be obliged to ­participate – one way or the other – in this ­development.

In such an example, the owner will be entitled to compensation, following a procedure. The property affected will be valued (this can be challenged by the affected party supporting this with an alternative survey if it is felt the valuation is too low). If the owner is not satisfied with the final offer from the government body, he will be able to challenge it and can ask for the amount offered to be paid on account. For example, if the owner is being offered €100,000 and he argues that the property is in fact worth €200,000, he will be able to challenge the compensation offer in court and, in the meantime, be paid the €100,000 offered.

The compensation will depend on the classification of the land, whether it is rural or urban (of which more later).

The affected owner may want to challenge the expropriation itself, offering more suitable alternatives for the development. This is only advisable if there is a sound argument.

If the planned construction is not carried out, the former owner will be entitled to the recovery of the land that was expropriated, reimbursing the compensation paid.

Land law in Spain classifies land as rural and urban. According to section 12 of the Land Law 8/2007, rural land is the broadest type because it includes any land which, even though it may be classified as available for building, is not yet a building plot. Urban land is land that has been ­converted into plots and is only ­waiting to be connected to utilities (water, electricity and so on). Therefore, rural land only becomes urban land when the development plan has been put into operation, the land has been divided into smaller plots and the construction of the supplies for the area has been carried out.

The land classification of a town or city is made by the urban planning department of city hall. It is responsible for the preparation of the land plan. The classification for a ­county or province is carried out by the regional authority. The urban ­planning department of the regional authority is also responsible for the control of the local planning ­regulations. The local authority needs to submit its general plan to the regional authority for its approval.

Cases such as Marbella are explained in this fashion. The urban planning department had its plan approved by the Andalucian authority. But the Marbella authorities did not follow the plan and they granted planning permission to build in a green zone. The regional authority found out and stopped the constructions, revoking the planning permission and, in some situations, even ordering the demolition of the illegal constructions.

The value of an existing property that may have to be demolished by the authorities will be determined by the classification of the land in the area, according to the law and local planning. Therefore, unless the ­property is urban, as described above, the value of the property will be rural, where compensation is obviously much less.

Another situation that owners may encounter is a change in the town zoning by which an urban area may become rural, although the authority decides not to demolish the properties in the area. These properties become unregulated because they are not strictly legal (they are built in a non-urban area), but are also not illegal (and will not be demolished). Unfortunately, in this situation owners are only able to carry out maintenance and not make improvements or extensions to their property. In practice, this means the condition of the property is likely to deteriorate.

Another important thing to know is that in Spanish land law the authorities have the power to act against an ­illegal situation without time limit. They have four years to impose an economic sanction on the owners, builder and architect who owns, built and managed the construction of an illegal property. However, the demolition of an illegally built property does not ­constitute a sanction as such because it is seen as an action to restore ­legality, therefore there is no time limit in this case.

Development scandals

The most common situations in which British non-residents may find themselves in the unfortunate situation of their Spanish property being demolished are as follows:

When the property (house or flat in a building) was built without ­planning permission.

This is not unusual, unfortunately. Before the scandals of illegal developments in Marbella, which eventually brought about greater regulation of new developments, it was not uncommon for certain developers to do everything at once: sell the properties off-plan, start the construction and apply for a licence. Usually, licences were approved by the local authority before the construction was finished, but sometimes this was not the case.

In such situations, the remedy available is to sue the developer in order to declare the developer in breach of contract and to get a reimbursement of the money paid. Spanish law obliges the developer to provide the buyer with a bank guarantee of the money paid. However, many buyers, not aware of this, are never provided with the guarantee. Where the buyer does not have a bank guarantee, it is even more important to sue the developer at the earliest possible moment because there is the risk that the developer may not have enough money to cover all the claims made.

When the property was built with a licence, but illegally.

In the past, some planning ­permissions issued by certain local authorities were illegal because they contravened the local plans of the ­village, town or city, as in Marbella. The local authority gave planning permission to build on zones not classified for housing development, such as zones reserved for local services: schools, parks and playing fields.

In this situation, it is the local authority which issued the planning permission which was negligent. When there is planning permission, there is a logical expectation that it would be legal and the buyer could not have been expected to query the validity of the licence.

This situation is made even more complicated because several things can happen:

  • The local authority might approve a new zoning plan reclassifying the rural land as urban, so that all the constructions built on the previously rural land become legal;
  • The local authority might do nothing and the regional authority might not review the situation – thus nothing happens;
  • The regional authority might review the situation and decide that the ­building is illegal; or
  • The regional authority might review the situation and decide to make the building legal.

The first situation is quite common. Given the costs involved in making a building legal by any other means, it is not uncommon for the local authority to approve a new zoning plan including the illegally built property. This should mean the end of the nightmare, although there are some rare cases in which this can still be reviewed.The second and third scenarios can last a very long time, leaving owners in limbo. It is more than likely the local authority will in the meantime approve a new zoning plan, as in the first ­scenario, but it could well turn into the fourth possibility, whereby the regional authority enforces its rights to restore the legality by way of demolishing properties that were ­illegally built.

Owners who find themselves in this situation have the option of claiming from the local authority for the ­damages caused. The value of the property lost would be rural (because the property was built originally on rural land), but the claimant should claim for all losses caused. It is ­important to bear in mind that the losses will not include any profit made through rent or the sale of the property.

Unfortunately, even if the owners become aware of the illegal situation of the development before city hall has made any moves, no claim for damages may be pursued because no loss has yet taken place. In other words, owners will have to wait until city hall starts proceedings to restore legality before they can make a claim.

When the property was built on the coast.

The shoreline is the other danger area for certain properties. The Coast Law was approved in 1988 and it superseded the 1969 law.

This law is very complex and a detailed explanation would require an article of its own. It is enough to know its consequences.

When a property is near the coast (such as near a port or a beach) the buyer needs to get a certificate from the national coastal authority declaring that the property is not within 100 metres of the coastline.

Some British owners of apartments with all the licences in place have found that the property was illegal because it was within 100 metres of the coastline.

The coastline is not what you might necessarily think. Things like the highest point that the sea has reached in several years or the new water line as a consequence of the construction of a port can affect the definition. If the authority plans to redraw the coastline, all the owners should be notified, so it is very important to be properly registered. Once the new coastline is drawn, and if it affects someone’s property, the owner will be entitled to keep this property for 30 years before demolition, unless the authority wants to buy out the owner, in which case the price will be that of an illegal ­construction built in a non-urban area.

The only option here is to argue against the location of the new ­coastline. Frequent irregularities arise when authorities draw new coastlines and the decision may be revoked if challenged.

Play it safe

In purchasing land or property, make full searches and evaluate risk. If land is rural and in an area of general development, any compensation as a result of compulsory purchase will be based on a low value. Your home could be demolished if the land is not reclassified. While the value of urban land and buildings is far more expensive, it is safer. Make specific enquiries of coastal authorities if your property is close to the sea (100 metres or so). Do not assume because it has stood for the past 50 years it will continue to do so – in Spain there is no time limit to restrict a restoration to legality.

Alfonso Valero is an abogado (qualified Spanish lawyer) and registered European lawyer at Nockolds in Bishop’s Stortford